How the internet became a closed shop

A little over a decade ago, just before the masses discovered the digital universe, the internet was a borderless new frontier: a terra nullius to be populated by individuals, groups and programmers as they saw fit. There were few rules and no boundaries. Freedom and open standards, sharing information for the greater good was the ethos.

Today, the open internet we once knew is fracturing into a series of gated communities or fiefdoms controlled by giants like Apple, Google, Facebook, Amazon and to a lesser extent Microsoft. A billion-dollar battle conducted in walled cities where companies try to lock our consumption into their vision of the internet. It has left some lamenting the "web we lost".

The same firm in some cases now provides not just the content we consume but the devices we consume it on and a plethora of other services to help manage our digital lives, be it email, online storage or e-commerce.

Increasingly, the web kings are expanding into each other's turf and butting heads with smaller pretenders to the throne, such as Twitter, locking competitors out of their ecosystems but, more importantly, locking us, the consumers, in.

"There's no question that we are witnessing a clash of the titans over 'our' data", says Jennifer Zanich, serial Australian entrepreneur and now co-founder of start-up Paloma Mobile.

Data is the oil of the digital age, handed over willingly by consumers seduced by the latest flashy new web service. Big data is where the big money is made on the web today, and famous US venture capitalist Mary Meeker describes it as the "Wild West" of the internet.

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The amount of global digital information created and shared by consumers has grown exponentially over the past few years to 2.8 trillion gigabytes in 2012, according to analyst firm IDC. Each big tech firm wants to capture as much of that data as possible.

"It's important to remember that if you aren't paying to use a product, then you are the product; your data is being sold to advertisers who are paying," says Ryan Junee, technologist, investor and founder of fashion recommendation app Inporia.

Where once the battleground was hardware, networking and software, areas dominated by companies such as HP, Cisco and Microsoft, respectively, today the big dollars are in your bytes, says Anthony Goldbloom, founder of big data pioneer Kaggle.

And the tech giants are now building what Zanich calls "moats" around their platforms to lock in consumers and their data, as users continue to ignore the fine print. Instagram sparked an online backlash last week, announcing a new policy claiming the right to sell users' photos without payment or notification (before back-pedalling after users started disabling their accounts).

"It is like trusting the financial services houses in the GFC to do the right thing," Zanich said. "We know now they were betting both sides of the deal, manipulating the consumers and the market to their own gain, but they told us it was about us, their customers."

The impact of the platform-dominated world is most keenly felt for users of mobile devices like smartphones and tablets, which may soon be the dominant method of getting online, as they are expected to outnumber desktops and notebooks next year.

Apple users, for instance, are increasingly locked in. Once you've bought your apps, music and movies from the iTunes store and have your content and contacts backed up in the iCloud, you're far less likely to switch.

The same goes for Google's Android with its Play store and tight integration with Google services like Gmail, Google+ and Google Drive. Google is now even beginning to control the pipes the content is delivered on with its Google Fiber network in parts of the US.

For Google, whose long-time motto has been "Don't be evil", anything that has the potential to get in front of its search engine is a risk, says Matt Farnell, co-founder of app analytics firm Appsperse, which is why it developed things like Android and the Chrome web browser and distributed them widely for free.

The strategy appears to be working. While Apple's profit margins are head and shoulders above anyone else, Android recently surpassed iOS in Australia in smartphones for the first time and globally it accounts for three-quarters of the market.

This maintains Google's search market share and provides loads of data to deliver targeted advertising. The next frontier is social media, which is where more and more people are turning for content discovery instead of search, says Farnell. But Google has yet to crack the mainstream in this area.

The battle over platforms has significant implications for programmers, designers and companies selling products that run on them and already there are examples of stoushes that directly impact on customers.

Apple, refusing to allow a competitor to control one of the key features on its phones, booted Google Maps from iOS and replaced it with its own inferior Apple Maps, only to suffer ridicule and a vicious backlash from users who downloaded the new Google Maps app in their millions when it was released earlier this month.

Apple emerged with egg on its face while Google now has access to even more data. While the previous Maps app for iPhone was developed and controlled by Apple, the new app prompts users to sign in with their Google accounts.

But as they battle for control of users and their data, neither Google nor Apple wants a third horse entering the race. Recently Apple blocked updates for Microsoft's cloud storage service SkyDrive, while Google stranded Windows Phone 8 users of Gmail by removing support for Microsoft's Exchange ActiveSync, used to sync email, calendars and contacts. In November, Google dropped support for Internet Explorer 8 - which runs on 25 per cent of machines - for Google Apps, and Microsoft has also claimed Google has blocked its new Windows Phones from operating properly with YouTube.

Seek co-founder Paul Bassat, who now runs a venture capital firm Square Peg Ventures, said a small number of large companies were becoming increasingly dominant in terms of market share and profitability, while closed systems were prevailing over open on the mobile internet.

"Time spent on apps is growing faster than time spent on browser-based sites," he said. "We are also seeing proliferation of devices that are primarily used within a specific ecosystem such as Kindle devices."

Twitter began closing up shop last year when it blocked Google from accessing its "firehose", which allowed tweets to show up in its search results. In August Twitter placed onerous new restrictions on third-party developers looking to access its data, which effectively crippled many apps. It would rather build the features into its own product than see others make money from its platform.

The rule change snagged One.Tel founder Jodee Rich, who relies on access to Twitter's user-generated data stream for his social analytics platform PeopleBrowsr. Rich, who declined to be interviewed, took Twitter to court after it summarily suspended his access and has so far won a temporary restraining order. Others haven't been so lucky.

Facebook is also continuing to expand its empire, this week announcing its "Nearby" location check-in tool would offer Foursquare-style recommendations, while it has also introduced instant messaging apps, some of which do not require a Facebook account.

Online social games company Zynga, which grew off the back of Facebook, announced earlier this month that it was prematurely ending its exclusivity deal with Facebook in order to extend its own platform on Zynga.com.

Instagram, bought by Facebook for $1 billion, grew off the back of Twitter. But in July following the acquisition, Twitter cut off access to its data, preventing Instagram users from importing their list of friends from Twitter.

In December, Instagram suddenly disabled its integration with Twitter so shared photos did not display in-line, forcing users to click through to Instagram's site. Twitter responded with its own Instagram-style photo filters and editing capabilities.

Google is not above such tactics either and has been accused of favouring its own services in search results and its own apps like Snapseed in Google+.

In a piece for Wired.com earlier this month, Ryan Tate said all the walls popping up between rival social empires was getting absurd. "Imagine if Ford built a series of freeways where Chevys, Hondas, and other makes were banned - that's Google+," he wrote. "Imagine if the Chevy Malibu drove at half speed on anything other than Chevy-owned freeways - that's Facebook's Instagram. Imagine if the California state freeway department Caltrans started building their own cars to discourage people from driving around in the half-speed Chevys - that's Twitter."

In a post earlier this month, popular tech blogger Anil Dash lamented "the web we lost", arguing today's social networks have "narrowed the possibilities of the web for an entire generation of users who don't realise how much more innovative and meaningful their experience could be".

Claus Mortensen, IDC's principal analyst for emerging technology and the digital marketplace, describes the practice of locking people in to "closed firewalled gardens" as a natural "coming of age" of the internet.

He says consumers like being able to use your Facebook or Twitter credentials to log in to other web pages. "A lot of people are ready at the moment to let go of their privacy because of the convenience ... it's always been a balancing act," he says. Mortensen says in some countries like Indonesia and the Philippines, where mobiles dominate, Facebook has become "a de facto internet in its own right".

While Apple, Google, Microsoft and Facebook get the bulk of attention, it is Amazon that is emerging as a potential leader of the pack. Well on the way to becoming the biggest retailer in the world, it has just launched an advertising platform to follow its customers around the web and also controls the world's biggest cloud computing infrastructure, which it leases out to other companies. It is now moving further into devices with its Kindle tablets, which it sells at cost and uses them as a Trojan Horse to sell content.

Matt Barrie, the outspoken CEO of Freelancer.com, a Sydney-based site that allows firms to access cheap labour from overseas, sums up the state of play as: Apple has reduced itself to three products: the laptop, the phone and the tablet, Google is "stumbling", Twitter and Microsoft are "screwed" and Facebook "may have peaked".

But Amazon? He compares Amazon to Rockefeller and the oil industry. "They are going to rule the world."